Monthly Archives: December 2025

Who’s Funding Your ProcureTech Vendor?

This question is more important now than ever! Not only is the RCD (Relative Corporate Debt) of many FinTech companies too high right now (See: Calculating RCD), signalling a decline in customer service and potential abandonment, if not outright vendor failure down the road, but the ongoing viability of many VC and PE firms, or at least their ability to support their investments, is also in question.

Many firms are too heavy on AI plays that are still losing as much as $4 (or more) for every $1 of revenue they take in, requiring massive ongoing investments to maintain. Even big PE funds only have so much cash to burn, and the only way they can do this is to liquidate assets and holdings if they can, or, in the worst case, simply write off losses (and associated future costs) of those holdings they can’t liquidate.

Softbank’s end-of-year investment in OpenAI really puts this into perspective, as chronicled by Mr. Klein of Curiouser.AI and Berkley in this LinkedIn post.

As far as I am concerned, this is bad news for any of SoftBank’s FinTech holdings that may require funding in the next few years, and a warning to make sure you don’t select / continue / depend on any of their FinTech holdings where they have a large or majority stake until verifying those holdings are profitable and likely to stay that way! (Now, SoftBank has traditionally had very good investment chops, so it’s likely the majority of holdings are profitable …)

However, they aren’t the only firm making huge over-investments in AI and weighting the portfolio down with companies that might never see a profit. This means that this warning also applies to many other Tech investment funds, starting with Thrive, Dragoneer, Altimeter, and Coatue who also have large stakes in OpenAI. They could all end up in the position where they are going to have to sell off / dump assets to maintain the ridiculous losses OpenAI is seeing, and any holdings not performing well will likely be the first to go / get dropped. (Remember that the average age of the first three of these groups is 15 years, and they are [becoming] modern SaaS/AI heavy, whereas Softbank Capital has been investing for 30 years, and is a lot more diversified. Softbank may be able to weather a complete crash in OpenAI valuation if it occurs. But these other firms may not!)

But, as we noted, the real warning is not for SoftBank or these other mega funds (in the significant 8 and 9 digit range) that have funds to weather a storm. It is for the smaller funds, especially those less than 1 Billion, that are too AI heavy.

As a result, when selecting any FinTech platform, you need look at the portfolio of any investment player with a substantial majority stake. If a large segment of the portfolio of a significant/majority investor is “AI” companies losing money hand over fist, then the vendor of that FinTech platform cannot be considered a stable vendor if it is not profitable. This is because you can’t count on the fund having the resources to support the vendor to profitability, even if vendor is a fund darling. This is the case even if the RCD calculation looks good! A lot of the smaller funds can’t afford an AI crash given the AI-heavy focus of their SaaS portfolio.

(Face it. An AI crash is coming. Too much valuation against too little return, and investors only have so much patience. The only thing we don’t know is how severe the crash is going to end up being. Is it going to be a minor drop across the tech markets or a major crash like the 2008 housing crash or the 1999/2000 dot com crash?)

The Real Value of the Sourcing Innovation Mega Map (2026 Ed)

1) It shows you how expansive the space is and why you need proper Assisted Solution Selection:
[Successful Vendor Selection: The Series]

2) It shows you how unstable the space is:
a) Fifty-Four (54) companies are gone.
b) Ten-Plus (10+) have been acquired and/or renamed …
… and could be discontinued / go out of business at any time!
c) for some functions, there are too many options!

a+b) While a disappearance rate of roughly 6% a year is only about 20% higher than normal, it’s just the tip of the iceberg! Right now, the RCD (relative corporate debt) of a majority of vendors is too high and we’re on the cusp of a purge unseen in two decades (that most of you won’t remember). I am still predicting up to 15% disappearance for the next 18 to 24 months between

* mergers/targeted acquisitions so both firms can remain on the cusp of viability
* fire-sale acquisitions to pick up talent and customers
* outright bankruptcies from vendors who aren’t getting funding

because the market is still tight, the software project failure rate is at an all time high (88%, 94% for Gen-AI), and your C-Suite (who got burned last time) is still afraid to give you budget.

Post Edit: Happy to say I’m not alone. See THE PROPHET‘s predictions for the FinTech investment market for 2026:

c) even when you segment by spend-size (not market size), culture (not geography), and industry, you still can’t support more than a few dozen players. In some cases we have 100!

3) It proves that, statistically, there are quite a few vendors that are not good.

[How to Select a Vendor NOT likely to screw you over; Part of
The MOST important clause in your (Procure)Tech (SaaS) Contract Series]

I’m going to remind you again that some estimates put the number of psychopaths in professional positions in NA at 5%, 3 of the 4 top jobs they seek are Salesperson, Lawyer, and CEO … and they are all attracted to the industries with the most money. Right now, that’s FinTech (subsumes ProcureTech).

As many as 1/20 sales people/CEOs don’t care if you get value or not, as long as they get the deal. Especially when the firm took too much money and they have to hit unrealistic sales targets to keep their jobs!

For those of you who believe all founders and all sales people honestly want to deliver value, as a former developer/architect/CTO, I will tell you this: bullsh!t!

Some founders see their peers doing startups and getting rich in 5 years and just want the same. They’re building to sell, not to build long term customer value.

But sales people can be much worse! I have had the displeasure on more than one occasion to work for companies in tech positions where, even after the sales person was expressly told the product didn’t do X, couldn’t do X for Y months/years, and it wasn’t on the roadmap, still told the customer X was available today and they’d have it on initial implementation if they signed the deal now. (These are usually the same salespeople that never seem to stay anywhere too long …)

And here’s our updated Cascading Mega-Map 2026 Edition!

STOP PAYING PROCURETECH/FINTECH ADVISORIES A DOLLAR JUST TO LOSE THREE DOLLARS!

Last week, in our post where we asked if ProcureTech Generated Billions While Practitioners Lost Trillions, we noted three things:

  1. Approximately 1.8 Trillion Dollars (more than the annual GDP of 92% of the countries on Earth) will be wasted this year on Tech-Related Spending
  2. Approximately 600 Billion Dollars will be spent with the big consultancies and analyst firms who do Financial (Technology) and Procurement (Technology) consulting and advisory
  3. That’s three dollars lost for every dollar spent on big consultancy and advisory firms

So how do you stem the bleeding? Especially if you can’t STOP spending mooney on tech advisory because you can’t stop spending money on technology because you can’t survive in today’s digital world without it?

You STOP forking over (high) six and seven figures without a guaranteed return! In other words, unless they save you some coin, then your money they will not purloin!

More specifically, if they are promising outcomes, then (the majority of) their compensation should be 100% dependent on outcomes. If you don’t make bank, then their compensation will tank.

To be even more precise, don’t buy:

  1. any technology platforms where the majority of compensation is tied to successful sourcing events, transactions, etc.
  2. any GPO services unless it’s 100% outcome oriented
  3. any functional outsourcing unless the majority of compensation is tied to ROI

Now, the technology providers and consultancies will push back, steadfastly claiming that their technology and services are worth way more than they are charging, but here’s how you counter:

  1. you will pay a base annual fee for the platform that will cover 150% of their base hosting costs, so they won’t lose, and then a percentage of transactions, identified savings through sourcing events, contract value, etc. where the percentage is calculated such that if you save 100% of their promised savings, they will make 50% more than what you would pay on a fixed cost after negotiation — if they are so confident in their claims, this should be a no-brainer
  2. you will pay a fixed amount on each transaction, calculated based upon the expected savings before you sign the contract, and if they can deliver the savings, you will definitely be using them regularly — and, as with the Tech Provider, you will calculate this so that they win bigger than if you pay them a fixed cost IF they generate a return for you
  3. you will pay a fixed rate per hour that is enough to cover the assigned personnel cost (their salary plus 30% overhead), and any compensation beyond that will be dependent on the department delivering an ROI beyond a certain amount (which is the amount required to cover the basic fee you are paying them); and again, you’ll fix the compensation such that if they deliver 100% or more of what they promise, they will win big too

Now, you’re probably saying the doctor is daft by telling you to offer them 50% more than what you’d have to pay on a fixed cost basis if they deliver, but here’s the reality, without incentive, THEY WILL NOT DELIVER!

There is an 88% technology failure rate across the board, and 94% failure rate if it’s a (Gen-) AI project. The reality is, as we pointed out in our series on how, even if they have good intentions in the beginning, your (technology) vendor will screw you, the vast majority of systems fail to deliver, because, once the contract is signed and you have access to the system, they have zero incentive to do anything else for you.

Similarly, once they have you on a multi-year contract, why should the GPO or consultancy have any incentive to go beyond the minimum? If you want them to continually serve you and look for ways to generate a return for you, make it worth their while. And then you won’t be paying them one dollar just to lose three dollars in return!

This is where you start. Then, you question any consulting contract over 100K to 200K as a mid-market and 1 Million as a large global enterprise. At that point you have to define the value you expect and what gain-share agreement you are going to craft to ensure it.

Breaking Down the Risks: IP/cyber attacks

The risk of cyber-attack and IP theft over digital domains is constant and high and not going away. Not much need to be expounding the pounding on this one, but we will and give you a few tips on reducing the risk.

Expounding the Pounding

Cyberattacks remain high. Incredibly high. In 2014, a high year for cyberattacks, a NetIQ (acquired by AttachmateWRQ) Cyberthreat Defense Report found that 71% of organizations were affected by a successful cyberattack in 2014 (while only 52% expected to fall victim again in 2015). ( Source )

In 2024, North American organizations experienced an average of 1,298 cyberattacks per week, according to Check Point Research, which represented a 55% year-over-year increase in attacks. These attacks affected over 70% of of small to medium-sized businesses, according to Embroker. In other words, despite the continued increase in security software, standards and protocols, cyberattacks haven’t decreased, and neither have their success rate.

Reducing the Risk

Procurement is going to have to finally embrace cybersecurity best practices in everything they do as well as work with IT to ensure that all of the applications they buy or license meet these best practices as well.

Note that when we say best practices, we don’t just mean ensuring the technology meets all the latest specs, but that the organization, and its personnel, also ensures that they they take information security, operational security, and physical security seriously as well. An organization that doesn’t protect its information outside of systems is insecure, and if this includes passwords, the systems have been compromised with one login attempt. An organization that doesn’t maintain proper physical security makes it easy for an experienced hacker (who understands social engineering) to walk in, access a system that is logged in, extract the access keys for the broader systems, and the organization’s systems are then completely accessible by a hacker. And of course, if the organization doesn’t maintain proper operational security, its employees will let hackers right in no questions asked and all of the systems will be compromised.

This will require proper training and monitoring until everyone understands the issues across the entire organization.

Breaking Down the Risks: Natural/Man-Made Disasters

Disasters are on the rise. Why? Well, as per our last installment on talent, we are going to be expounding the pounding and giving you tips on reducing the risk.

Expounding the Pounding

As climate change has intensified, the number of natural disasters has risen sharply. Between 1980 and 1999, we experienced roughly 4,200 disaster events. Between 2000 and 2019, we experienced roughly 7,300 for an increase of roughly 75%.

Many of these were quite significant. According to the NOAA National Centers for Environmental Information, between 1980 and 2024, the US alone sustained 403 weather and climate disasters where overall costs and damages exceeded $1 Billion dollars (when CPI was adjusted to 2024) (Source: NCEI). The total cost of these events for the US has exceeded $2.9 Trillion dollars and resulted in 16,941 deaths.

Moreover, while the overall average frequency of Billion dollar weather/climate disasters over the last 45 years is 9, the average over the last 5 years is 23! In other words, natural weather/climate disasters are coming harder and faster than ever before (and the pace is still increasing).

If we turn our attention to the United Nations Office for Disaster Risk Reduction and review their 2025 Global Assessment Report on Disaster Risk Reduction (GAR), they found that while the direct costs of disasters averaged $70 Billion to
$80 Billion a year between 1970 and 2000, between 2001 and 2020 the costs ballooned to between $180 and $200 Billion a year and that disaster costs now exceed $2.3 Trillion ANNUALLY. Let that sink in. The global cost of natural disasters is now so great that only seven (7) countries have a GDP that exceeds that cost. In other words, the cost of these disasters, of which we now experience almost 400 a year (as the Emergency Events Database recorded 393 natural hazard related disasters in 2024, see ReliefWeb) exceeds the GDP of Russia, Canada, and Italy!

You’re going to be impacted by a natural disaster in the very near future to some extent. In most first world countries where a survey has been done the results are consistent: Four (4) out of Five (5) corporations agree that natural and climate disasters hurt because they were impacted in the last 5 years. Moreover, with the rapid rise in disasters your chance of not being impacted by a natural or climate disaster in the next 5 years is trending down to 10%. In other words, your chance of being impacted is 90%. It’s beyond the point that you have any chance of being one of the lucky ones. As per a 2023 Forbes article based on an Allianz Global Corporate & Specialty (AGCS) report, natural catastrophes are the largest driver of corporate insurance losses in the US because luck can’t save you now!

And we haven’t even started to talk about man-made disasters due to bad design, bad construction, bad maintenance, or just bad negligence that can result in entire skyrises being lost, manufacturing districts going up in smoke, ports exploding, entire swaths of land becoming unavailable due to nuclear meltdowns, global pandemics due to bacterial and viral leaks from research labs, and so on.

Reducing the Risk

Insurance

Do not, we repeat, do not forego the insurance! You will need it. However, unless you can prove you are employing best practices across the board this could be expensive. So you also need to employ a number of other best practices to make the insurance companies happy. (Although their Ren & Stimpy days are over. No more happy, happy, joy, joy because gone are the days when they only take in and never pay out.)

Third Party Vetting

Think those third party risk management / third party compliance management (TPRM/TPCM) solutions are a nice-to-have that you can wait on? Think again. You need to vet every supplier, every carrier, and every partner involved in the delivery of your goods from the factory to the store (and every warehouse, port, and transfer point in between). You need to prove you did your best to ensure only legitimate actors were in your supply chain so that you have some recourse (with insurance) when the shipment gets damaged or disappears (and to make sure you can afford your insurance premiums).

Overall Risk Vetting in Source Selection

Before you select a supplier as your chosen source of supply, you need to understand the 360-degree risks which are not just the supplier risks of financial stability, compliance, quality, human rights, and so on, but the risks related to its geolocation(s). Are there tensions between the country you are operating in and the country the supplier is operating/producing in that could lead to sanctions? Is there unrest that could lead to border closings due to uprisings? Is the area prone to natural or climate disasters that have been increasing in frequency in recent years? Etc. If the overall risk is high, and there is another supplier of comparable (which could mean slightly higher) cost that is considerably less risky, then you should be choosing the alternate, slightly higher, cost supplier.

Shipment Tracking / T(I)MS

You need to be tracking all of your shipments, and, preferably, have a Transportation (Information) Management System (T(I)MS) that integrates with your carriers. At the very least, you need to know when a shipment reaches each stop and then sets out for the next stop in the chain and know where it should be at all time. If the cargo is very high value or the carrier is a common target of criminal organizations because of what they typically carry (and that includes items like cell phones, laptops, and gold bars), then you need to ensure that the shipment is tagged and the truck, container, etc. is sending real time cellular signals at all time, that the carrier is monitoring their systems 24/7/365, and if a shipment ever goes dark for more than a few minutes or too far off course, and the driver cannot be immediately reached, law enforcement is immediately engaged. Unless, of course, you can afford to have 40 Million disappear! (A 40 foot shipping container can hold 44,000 iPhones. High end i-Phones are all 1K (or more) a pop. Do the math.)